Colombia’s peso looks like the weakest link among its Andean peersboth from a short- and medium-term perspective, according to Deutsche Bank.
(Gross government debt fell in January to $720.58 billion.)
In the short term, trends in export prices and production are more favorable to the Peruvian sol and Chilean peso than to the Colombian currency, strategists Oliver Harvey, Drausio Giacomelli and Sebastian A. Brown wrote in a note to clients.
In the medium term, the COP “is the one that will lose the most” if the country’s political direction takes a turn in the May elections, since the proposals for move away from hydrocarbon exports they would represent a massive shock to the terms of trade for the least diversified exporter in emerging markets.
(Russian stock market collapses due to tensions with Ukraine).
Colombia is also the most exposed to global transition in the medium term to move away from fossil fuels, they wrote. The global business cycle and external prices provide a more positive near-term outlook for CLP and PEN because the two countries have been able to take advantage of favorable price trends, unlike Colombia, according to Deutsche Bank strategists. Andean currencies, among the worst performers in emerging last year, recovered in 2022.
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